Back in 2011, when Indianapolis entered into a 50-year agreement with ParkIndy to upgrade and manage the city’s parking meters, I was among those strenuously arguing against that agreement. (We lost.)
Decisions about where to place meters, how to price them, what lengths of time to allow and so on have an enormous impact on local businesses and residential neighborhoods. These are decisions requiring flexibility in the face of changing circumstances; they are most definitely not decisions that should be held hostage to contracting provisions aimed at protecting a vendor’s profits.
Worse, under the terms of the contract, downtown developments and civic events would necessarily become more costly. New construction almost always interrupts adjacent parking, often for considerable periods of time. If the city is managing its own meters, it can ignore that loss of parking revenue, or decide to charge the developer, based upon the city’s best interests. Festivals and civic celebrations also require that meters be bagged; usually, there are good reasons not to charge the not-for-profit organizations running them. The ParkIndy contract, however, requires the city to pay the vendor whenever interruptions reduce its projected revenue.
No one could have foreseen a pandemic, of course. But that’s the point.
When you contract away your flexibility and your authority to make decisions that are responsive to unforeseen events, you can end up owing a lot of money to the private vendor.
In response to the pandemic, Indianapolis closed certain streets to traffic in order to allow restaurants to serve customers outdoors, a move that probably kept some of them afloat during a very difficult time. That required bagging the meters on those streets. WISH-TV Channel 8 reports that the city has already had to pay significant sums under the contract—particularly painful at a time a pandemic is wreaking havoc with city and state finances.
You might file this under “adding insult to injury,” since the city has evidently never come close to receiving the income it projected when this ill-conceived privatization agreement was negotiated. In May 2016, the Indianapolis Star reported that the city was reaping only about a quarter of the dollars ParkIndy had projected when it paid $20 million for the right to operate the meters until 2061.
As I wrote at the time, why privatize at all? After all, parking isn’t rocket science. There was never a satisfactory response to the obvious question, “Why can’t the city do this and keep all the parking revenue?”
Why couldn’t Indianapolis retain control of its infrastructure and issue revenue bonds to cover the costs of the necessary improvements? Interest rates were at a historic low at the time, making it seem even more advantageous to do so. If the Ballard administration felt it was ill-equipped to manage parking, it could have created a Municipal Parking Authority, as then-Councilor Jackie Nytes suggested.
And why choose to contract with ACS, the primary partner of ParkIndy? At the time, there had just been extensive negative publicity about ACS’ performance problems in Chicago and Washington, D.C., where an audit had documented mismanagement, overcharging, over-counting of meters, and the issuance of bogus tickets (ACS got all the revenue for tickets).
I could only conclude that the answer was the lure of the upfront payment of $20 million—money that helped the Ballard administration hold the line on taxes for a time. Instant gratification won against taxpayers’ long-term interest.
As the saying goes, to elected officials, “long-term” means “until the next election.”•
Kennedy is a professor of law and public policy at the Paul H. O’Neill School of Public and Environmental Affairs at IUPUI.